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Client has vacation home that rented for 275 days. Personal use for remaining 90 days. Why does putting personal use days in Sch E screen make entire loss deductible?

TaxNerdCPA
Level 1
I have the property marked as a Vacation/Short Term Rental.  I have split the expenses out between direct and non-direct.  When I put in the number of personal use days, it is allocating the direct and non-direct expenses correctly, but it is allowing the entire loss on the rental as non-passive and deducting it on Sch. 1.  It won't pull to Form 8582 at all.  Should I manually allocate the direct and non-direct expenses to the correct amounts and just remove the personal use days in order to force the passive loss to go to the correct forms?  I do not have the "nonpassive activity" box checked.  Thank you in advance.
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1 Comment 1
Accountant-Man
Level 13

A Sec. 280A vacation home is non passive, but there shouldn't be a loss unless the income less taxes and interest ONLY create a loss. The other expenses, including depreciation,  are limited to bringing the income down to zero. The rest are deferred into the future.

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